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LONDON (Alliance News) - Mineral & Financial Investments Ltd said Monday it has acquired the 51% remaining stake in mining investor TH Crestgate GmbH for GBP99,000.
Shares in Mineral & Financial were up 8.0% at 6.42 pence on Monday.
As a result of the transaction Mineral & Financial, itself a mining investor, now owns 100% of Crestgate. This includes Crestgate's primary investment, a 75% stake in mining company Redcorp Empreedimentos Mineiros Lda.
Redcorp holds 75% of Lagoa Salgada, a lead, silver, zinc and gold project in Portugal. Ascendant Resources Inc, which holds the remaining 25%, has agreed to an earn-in agreement into Redcorp and Lagoa Salgada. This agreement gives Ascendant the right to increase its stake in the project to 80%.
The earn-in agreement requires a direct payment of USD9.0 million into Lagoa Salgada for exploration and testing. A further USD3.5 million fee would then be paid to raise Ascendant's Redcorp holding to 50%. A feasibility study and further payment of USD2.5 million are then required in order for Ascendant to raise its Redcorp stake to 80%.
Mineral & Financial said that the acquisition of Crestgate will increase its working capital by USD900.000.
In its year to June 30, Crestgate had no revenue and made a profit of CHF71,183 or GBP54,924 on a one-off asset disposal. Crestgate carried the Redcorp investment at a historical cost of GBP1.2 million. Mineral & Financial intends to review the investment value of the Redcorp holding to reflect its market value.
"We believe this transaction is accretive to Mineral & Financial shareholders and secondly that it will simplify the ownership structure of Mineral & Financial's investment in Redcorp," said Mineral & Financial Chairman Jacques Vaillancourt.
"Mineral and Financial are extremely pleased to be an investor alongside Ascendant Resources to develop a project that has the potential of becoming a mine of consequence within the prolific Iberian pyrite belt."